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Church & State

IRS Moves To Alter Church Investigation And Audit Procedures

The Internal Revenue Service plans to implement new procedures that could make it easier for the tax agency to investigate and audit houses of worship that engage in illegal partisan politicking.

On July 31, the IRS issued proposed new regulations dealing with the conditions that must be met before a church can be audited. Under the proposed rules, the IRS director of exempt organizations would be required to sign off on all church audits.

The IRS is taking the action because of a federal court ruling from last year. In that case, a Minnesota church that was accused of politicking and financial irregularities sued, arguing that the IRS official who initiated its audit was not high ranking enough to approve such an action. A federal court agreed.

A federal law passed in 1984 requires that a high-ranking IRS official approve all church audits. The IRS, which under went an internal reorganization in 1998, says the new rules are needed to bring clarity to the process.

A separate Minnesota congregation, WarroadCommunityChurch, has won a temporary reprieve as the IRS seeks to implement the new policies. The church was being investigated because its pastor, Gus Booth, endorsed U.S. Sen. John McCain in 2008.

But the IRS has since informed the congregation that the matter is on hold.

Last year, Booth took part in a project sponsored by the Alliance Defense Fund (ADF), an Arizona-based Religious Right legal group. The ADF prodded pastors nationwide to openly endorse or oppose candidates from the pulpit, hoping to spark a test case in the courts.

Booth knowingly violated the law at least twice. In May 2008, he told his congregation, “If you are a Christian, you cannot support Hillary Clinton or Barack Obama. Both Hillary and Barack favor the shedding of innocent blood (abortion) and the legalization of the abomination of homosexual marriage.”

Booth went so far as to send a copy of the sermon to Americans United, daring the organization to report him to the IRS. In September, Booth violated the law again as part of the ADF’s project.

Americans United reported Booth and five other pastors who took part in the so-called “Pulpit Freedom Sunday.” Booth, who admits he broke the law and even sent a copy of his sermon to the IRS, said he welcomes an investigation.

Americans United contends that the ADF and other groups are putting churches at legal risk. The Church at Pierce Creek, a Binghamton, N.Y., congregation, lost its tax exemption after it ran an ad in USA Today in 1992 calling Bill Clinton a sinner and warning Christians against voting for him.

Attorneys with the AmericanCenter for Law and Justice, a legal group founded by TV preacher Pat Robertson, sued on the church’s behalf but lost in court.

The ADF has announced that it will repeat “Pulpit Freedom Sunday” this year on Sept. 27. Two states, Virginia and New Jersey, have gubernatorial elections, and others are holding elections for state and local offices.